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High Unemployment, Lower Stocks and Growing Worries. Is This 1930 All Over Again?

Posted Jun 29, 2010 09:48am EDT by Henry Blodget
Related: ^dji, ^gspc, gld, udn, uup, tlt, tip

Yesterday, economist Paul Krugman said we're headed for another Depression.  The world's new obsession with "austerity" will kill the global recovery, Krugman says, and plunge the economy into a double dip.

Could that really happen? Could we really be headed for a repeat of the 1930s?

Last year, Dan Alpert, managing principal with Westwood Capital, described the huge stock market rally that followed the March lows as the "greatest sucker's rally in history."  He also produced a fascinating series of news clippings from early 1930, a few months after the historic market crash of 1929, that showed that market participants in those days had no idea of what was about to hit them.

Specifically, Dan assembled headlines and commentary from the New York Times, Wall Street, Journal and other papers that showed vigorous debate about how strong the recovery would be--with almost no suggestion that the market crash of the previous fall might only be the beginning.  The market rallied strongly in the spring of 1930 amid booming optimism.  Then it crashed to the horrific lows of early 1932.

Dan Alpert says we have not yet addressed the core problem with our economy, which is the massive debt mountain that we have built up over the past 30 years. Until we address that problem, and fix it, the economy will struggle. 

And with unemployment still at 10%, global economic indicators turning downward, and the government's stimulus efforts failing to turn things around, it is not a stretch to think that another Depression has already begun.

See what everyone was saying in early 1930, when they had no idea what was about to hit them>

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  • A Yahoo! User
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    A Yahoo! User Tue Dec 21, 2010 10:22 pm EST Report Abuse
    Okay so I'm only 15, but i have opinions and thoughts on this.
    My 89 year old Grandpa lives downstairs, he always is wanting to save stuff, never willing to throw it away. Yesterday I asked him "Grandaddy why don't you ever want to throw old food out?" and he answered "I grew up in hard times, not much food and the food we had, we didn't throw it away until it completly spoiled. There are children all around the world starving, with no food, so I think it's bad to do that." so last night i was thinking about it and it makes sense.
    In 10 years, when I'm married and have kids, if were in a depression (by the way i am definately not rich) then i'm gonna be saying to all the ignorant people who are right now just getting more materialized and just wanting more and more stuff, not learning to take care of themselves, that i saw it coming. My mom never made me do chores, but when i thought about how if we go into a depression and there's no more daycare that is cheap enough for middle class people, then I'm gonna have to be a stay at home mom which means I have to learn to cook and clean FAST. not many of my friends can cook anything except for toast.. i can cook but not too much. So for the past week I've cooked dinner.
    It's just a thought but whoever reads this, for the sake of their kids, might want to start making their kids cook and clean cause personally i'm not gonna worry about the economy, what can i do? i live in a small town just outside the mountains with my mom, grandpa, and brother. so i'm gonna leave it to Wallstreet to try to fix this even though i know that isn't gonna happen because unlike me, they definately aren't "down to earth" and are only going to care about their $6,000 (that's more than my mom makes a month) suit they're wearing to the next meeting instead of fixing our economy and making it easier for little girls like me thinking about how i better learn how to take care of the farm, that will be taking care of me when i'm 25, married and with kids.

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